We're going to get kicked off. Okay. Look, it's great to start our next fireside chat. I know people are moving from room to room, but in the interest of time, let's kick it off. We're so happy to have Grindr back to the conference again this year. George has been nice enough to make this an annual tradition. I feel like we've had this conversation now for a couple of years in a row.
I was actually telling somebody that I've now been to this conference seven times total, and this is my fourth for Grindr and three before.
There you go.
A lot.
Well, I always enjoy the opportunity to talk and to catch up away from the usual earnings cadence where, yeah, we're having those types of conversations. Maybe talk a little bit for those who don't know it as well, that are either listening in or in the audience, a bit about the journey the company's been on. Because the company's been evolving on the platform side, on the product side, and you've always had a lot of ideas about where you want to take the company over the medium to long term. Talk a little bit about going backwards before we go forward.
All right. Grindr is the largest network of gay and bi people anywhere in the world. We have about 15.5 million monthly active users around the world. The total number of people who during the course of the year use Grindr is actually much larger than that, but some of them use it for just for part of the year rather than all the time. We actually don't report users, we report devices. So that's an important consideration when you think about the number that you see. We've been around for a long time. Grindr got started in 2009, and took off like weeds and never did any marketing. The fact that it was on mobile and on iOS made it grow.
Grindr was owned by Kunlun for a while and was then bought out by a group of investors under CFIUS's directive in 2020, right in the middle of COVID, and then went public in 2022. I've been at Grindr since 2022 as well. The way we have thought about our journey since then is in the following kind of phases. First, we wanted to make the product a lot better, and I think we have done a lot of that, and we can talk through how we've done that. While at the same time driving increased monetization by getting more people to pay for Grindr. We've gone from sub 6% pay penetration to over 9% pay penetration, while MAU has grown by several million users. If you stabilize MAU for where it was in 2022, we're actually over 12% pay penetration now, which is fantastic.
Secondly, by developing new products that will drive monetization even beyond that, and we'll talk about that in a minute as well. Thirdly, by investing in new opportunities that can drive growth by capturing more of the wallet of our users outside of the connections experience.
Yeah.
That's been kind of the journey that we've been on. We've fundamentally transformed the team. Only about 20 people who were at Grindr in 2022 are still at Grindr today. It's been a complete rebuild from that perspective. We invested tremendous resources into rebuilding the technology. Most of our code base is rewritten now and all new. We've been very early in adopting AI in how we work. About 80%-85% of our code base is now AI generated. Our engineering productivity has 2.5x in the last year, which I think is fantastic. For the first time in my career in technology, engineering is no longer the problem in terms of like, Hey, I can't get something done. It's more, we don't have enough product resources to actually manage all the work that engineers can do.
We've also been really early in adopting AI in the product itself and the experience that people have. It's been a really fun and awesome journey, and we still have a ton of opportunity. Our kind of goal every year is to grow 20%+ with certainty, and I think we've done that, and I believe we can continue to do that for the next many years.
Okay. We're going to go into all of those various areas, but let's start with how your view has evolved with respect to the market opportunity itself. How many people have the ability to identify with the app? What kind of growth opportunity do you see in developed markets versus emerging markets? How do you think that continues to evolve?
There's definitely a tailwind behind Grindr in terms of more people being willing to say that they're gay, more people coming out and being comfortable, and as a result, more people being willing to use our product. That was true in the U.S. in the time when Grindr launched, obviously with gay marriage and acceptance increasing significantly. It's now true in other parts of the world, whether it's in Latin America or Asia or India. That opportunity is pretty significant, and it's a huge tailwind for us. That helps with users. It doesn't necessarily help with paying users and/or revenue because obviously in the countries where you see that benefit now, you don't have as much of an income opportunity for people, and so their ability to pay for the product is lower.
When it comes to the market opportunity from the revenue perspective, when I started at Grindr, what everyone focused on is your pay penetration is 5%ish, matches with Tinder is at 25%. If you get it to Tinder levels, the business is going to grow massively. That made sense to some extent, and we've done a lot of that so far, as I described. But what you realize along the way is that if you keep doing it, you'll actually end up with a product that no one wants to use.
Yeah.
Because the free product will degrade dramatically, and that will not be good for anyone. We did it for a few years, and then we said, now it's time to enter a new phase where we actually start creating new product experiences within the product that people are willing to pay incremental amount of money for. That means that we probably won't be converting more people to become payers, but we will get the people who are already payers to pay us more money. That's the phase of market growth in a revenue growth that we are in today. The first step of it was to raise prices on our paid tiers. We've done that very successfully. Churn on that was much lower than we thought would be, and we were really happy with the outcome.
The next phase is launching some of these more premium tiers for our users. I think that's going to be a really successful effort for us. Beyond that, the other really big learning for me has been how much opportunity there is in healthcare. We launched Woodwork as our first kind of toe in healthcare, a couple of years ago. That's our performance medications brand. But the more time we spend in healthcare, the more we talk to our users about healthcare and the learnings that we got from Woodwork, we realized that doubling and tripling down on healthcare makes a ton of sense, and we think that that can be a massive growth opportunity for us in the years to come.
Okay. I do want to maybe parse at a few of what you just said in there. Come back to the free tier and users who come onto the platform, with that as maybe an entryway product or experience with your brand. Talk a little bit about what you need to do to foster the free tier, make sure it continues to be the avenue of top-of-the-funnel growth in the platforms that it is today, just so you don't lose any momentum from that perspective.
Totally. That is something that is very different about Grindr than other dating products. I think Grindr is more than a dating product in general, but in this sense, we are very different. An average user can use Grindr and never be a payer and have a very satisfactory experience. Now, some of them might not like the fact that they see ads, but other than that, the usability of the product is very open, and you can speak to many people in an open way without being a payer. We never limit any chats that you can send. People can send as many chats as they want and engage in full-on conversations. In that sense, Grindr is almost like Instagram than it is a dating product.
That is crucial because Grindr is a rite of passage for a lot of people who become 18, are trying to figure out, am I gay or not? What does it mean to be gay? What is the gay life like? They join Grindr, and it is a great source for them to figure all that out. We want to be able to foster it all the time. So maintaining this really robust free product is really critical for us. We have invested a lot of resources into the free product, and we made it a lot better. The free product is way less buggy now. It does not crash anywhere near as much as it used to, and the feature set that we offer is deeper now than it was, and a lot more is on the come. That is, again, crucial to our user growth.
The really awesome thing is that our payer user penetration is much lower among 18 - 30 cohort, and then it grows as the user base ages and is quite high at the 40+ age cohort. We released this data last November, so it is available on our website. We attract new users, mostly who are younger in that 18 - 30 cohort. Then as they age, they become payers. It so happens that as they age, they also develop more disposable income and are more able to pay. That is a really good dynamic, which we want to continue to nurture.
Okay. As people age in or move towards being more monetizable users through the life cycle of the product, talk a little bit about what you have learned. You talked a little bit about raising price and not seeing as much impact on churn, but talk a little bit about the learning curve you have had about price elasticity around the service. Because you strike a very unique tone relative to other companies I cover where you are very protective of not over-monetizing and being protective of the user experience. But there is a monetization journey that I think the company can go on.
Well, our ARPU has gone up dramatically, right? I think we've had a 50%+ increase in our ARPU over the last four years. So we certainly are monetizing way more now than we used to, both in terms of we went from about 800,000 paying users in 2022 to 1.5 million paying users today. I mean, that's a huge change. And those people are paying 50% more per user than they were paying previously. So we've had a really strong journey in monetization. But at the same time, we've done that without having any negative impact on the user experience, and our engagement metrics are the same as they were before we started on that journey, which I think is really important. I'm not at Grindr to drive monetization and then go get a different job.
I'm at Grindr to continue building an awesome product that has been incredibly important for our user base for the last 17 years, and I hope will be important for the next 20. So we need to balance what we do for revenue with ensuring that the product remains something everyone wants to use and come to when they're in that kind of 18 - 25 cohort. That said, I believe that there are many new features and services that we can offer to our paying users for which they will pay significantly more money. And so far, our experience has been that when we offer those products, and there's a real value in what we offer, our users are very willing to pay for them.
And nothing that we've done so far has disproven that thesis, and we've had a bunch of data points suggest that they are willing to do that. So what we're going to continue doing in 2027 and 2028 is offering these premium experiences through a tier that we're calling EDGE to start with. That will be incrementally more expensive than anything we offer today. It's meant for a small number of people that will subscribe to it. We'll probably even cap it at, say, 1% of our amount total if we ever get to that number. But the revenue opportunity in it is very large.
And maybe just talk a little bit about what an opportunity for a subscription offering presents to you as a company in terms of not only the monetization component to it, but what it might also mean towards solidifying the upper-end user and creating an engagement trend and all those things that are outputs as well.
EDGE is this new tier that we're building. It's an AI-based tier. Users obviously don't care whether it's AI or not. What they care about is the outcome of the features that they're getting. But the actual features were built with a lot of AI capabilities. What EDGE offers you are things like insights about our users. We look at our user behaviors, we look at their chat history with other people, and try to enforce certain new data points about them, which we then share to an EDGE subscriber. EDGE goes through all your chats, and Grindr users chat a lot. An average Grindr user sends 50 chats per day. By reading your chats, it creates a summary of each conversation and then prioritizes the individual that you should be actually engaging and talking with, which is in some ways quite magical.
You couldn't have conceived products like this three or four years ago before Gen AI, now you can. This is all then packaged into a new tier that's called EDGE, and EDGE will continue to improve over time. The opportunity here is that a few users will subscribe to it. Will it be 20,000, 50,000, 100,000? I don't yet know, but that's kind of the journey that will go on starting later this year, early next year, and understand how big it can be. By being subscribers to this new tier, they'll drive our growth and revenue, while in effect subsidizing a really awesome free experience for everybody else.
Yeah.
That's really important because the reason these users want to pay for a value-added service is because they want to be able to engage with a very happy free customer.
Okay. In terms of marketing a subscription like that, how much of it will be a marketing effort, and how much of it will be already identifying who the more likely users are that will want to subscribe and just doing very hyper-targeting and putting a message in front of individual users?
Both.
Okay.
Grindr definitely historically has not been good at product marketing. Frankly, that's not been a muscle that we're very used to using. For this launch, we want to be much better at it, and that is something we've been working on for the last few months, like what will be the right marketing campaign for this product. I'm not going to announce what it's going to be here, but when we go live with it, I think it's going to be pretty special. It certainly will be a lot more product marketing than anything we've done in the past. That said, our AI now, we call it gAI, is actually really, really good. We are pretty awesome at knowing which of our users are more likely to become subscribers to this new tier.
Obviously, we're going to do a lot more marketing targeting at those users than overall. But part of our view on EDGE is that we want to create FOMO around it.
Okay.
We want people to want to be in it. You do want to market both to people who are more likely to convert to it, as well as to everybody else, so that it becomes a self-fulfilling prophecy that more people want to become part of that tier.
Okay. You did talk earlier about health and the importance of health to your platform, but also to the community that you serve. Talk a little bit about the opportunity set that sits in front of you to be a provider of solutions, advertising, product, how health might evolve broadly for the platform.
Grindr has always played a really big role in our users' health. I think not surprising to anyone that health matters a lot to gay men for a couple reasons. Number one, we're just a lot more wellness conscious. We do a national survey of gay men every year, and one of the more striking data points that is usually when we ask, How often do you work out? Over 50% of gay men will tell you that they work out 5+ times a day, which is like 10x national average. Wellness does matter to our users a ton. Secondly, many people still have personal experience with how terrified they are of catching a sexually transmitted disease. From that perspective, health matters a lot as well. Grindr has always played a really big role in the latter.
PrEP, which is a medication that you take to avoid getting HIV, had been around for years and hadn't been seeing the uptick that it needed to see until Grindr put it on the profile in about 2014, 2015, on whether are you on PrEP or not. That one small change pushed PrEP from being kind of out there on the periphery to becoming central to how many gay men think about their sexual health. Now, being on PrEP is a very common thing for so many people. People rely on us for a lot of information about health as a result. We, from all those data points, felt like health and wellness is a huge opportunity to expand Grindr and what we do. We entered health through a performance medication focus with Woodwork, which offers ED medications, GLP-1s, a couple of peptides.
We chose that as the first place to go to because it's cash pay. The regulatory component to being cash pay is a lot simpler. It was easier to launch with a third-party partner, OpenLoop, that does all the fulfillment and the prescriptions and the logistics of that. For us, it was a learning moment of, hey, we're going to do this. See what we need to do and how can we do better with health. What do our users expect? Do they even trust us with things like this? We really think of health as a three-legged stool. The performance medications is one leg of that stool. STD transmission management and prevention is the second leg of that stool, and then clinical care and longevity is the third. Over time, we're going to build products and services across all three.
We really believe that healthcare can be a huge opportunity for us. I'm not promising this, but I can envision a world where healthcare as a product set five years down the road is as big as core Grindr is today.
Got it. Okay. Building on that answer with respect to health, you've talked about creating a wider sense of community and offerings around the concept of the gayborhood. You've pointed out some examples around wallet share and purchasing habits. Talk a little bit about what you could stand up there directly or through partnerships that could create a more transactional or commercial nature to the platform over time as well.
When we became public and started to talk to more investors, more analysts, and frankly, talking to media as well, one of the things we realized is that most people still thought of Grindr in a very narrow sense of, hey, this is a product for a casual connection, AKA hookup. But in practice, a lot more was happening on Grindr than that, both in social connections, but also in a lot of other ways. So we wanted people to understand that we do so much more. 50% of currently existing gay male relationships in America started on Grindr. So yes, there are a lot of casual connections, but also half of the long-term relationships started here. So we wanted a way to explain this to people and kind of creating this moniker of a Global Gayborhood was a way to do that.
Those of us who live in large cities have the opportunity to walk into a gayborhood, and we have a community around us right away, but for most people, that's not something they can do, and Grindr is that community. In a gayborhood, you have a lot of fun things to do, like going to bars and going to restaurants. You also have a lot of businesses that cater to your community that understand you a lot better, and you can buy from them. So we felt that there was an opportunity to start expanding what Grindr offers and capturing more of the wallet of our users through those kinds of services. We've tested one, which is healthcare, and the feedback is that clearly works and we should double and triple down on that.
We're doing some things in travel, whether it's in-app features like maps where we tell you where to go to when you're traveling, and over time, adding things like what are the activities happening in those locations, what are the right hotels for you to stay at, what are the right bars to go to. So travel is another big opportunity. To perhaps content. We build a content hub on Grindr, we call it Grindr Presents, in which we bring together Grindr-created content that people watch. We have hundreds of thousands of people a month going to the content hub to consume that content. Perhaps over time, we start adding non-Grindr-created content to that content hub. So there's many different ways in which we want people to experience what Grindr and what they do on it.
Today, users do a lot of things by hacking the product, over time, we want to be able to build features for those hacks so they don't have to be hacking the product.
Yeah. Okay. You referenced a little bit earlier some of your initiatives around how AI is changing the platform. Can you talk a little bit about both what it's doing for your cost structure, but also how you think it might change the consumer-facing aspects of the platform over the longer term?
Absolutely. One of the reasons I was excited to take this role was that Grindr has so much data. This richness of data, 50 chats a day, one hour on the app a day, like that's an incredible amount of data that our users create, was creating a massive opportunity for AI. If you look at AI companies today, startups that is, most of them are in enterprise. There's very little consumer-facing generative AI that is being created. The reason is that a startup needs data to make AI work, it's very hard to get that consumer data. But we don't have that problem. We have the data, we can behave like a startup in creating new experiences. To start with, to step back a little bit in terms of how we work, our AI adoption has been incredible.
Every engineer is now an eng manager of AI synthetics that are writing code. Our productivity has increased dramatically. Frankly, we need the tools to catch up in other parts of a business. The tools for product, the tools for design, tools for finance using AI are nowhere near as good as the ones for engineering, that is actually now keeping the rest of our org behind. So we've been very focused in becoming AI native in how we work. My workflow every day has changed as well. I think I'm a way better CEO, frankly, thanks to AI now. I'm way clearer in direction that I give to my team.
I am able to share what's happening in my mind and what I'm thinking about way better with the team because I am constantly in conversation with ChatGPT primarily and Grok secondarily around what I'm thinking about and asking them to do things like, Hey, today you're going to be like Elon Musk, and you're going to challenge me on these things and critique me as if you are him. It's really, really strong. It's a completely different way of working now. The amount of stuff I can get done is way higher. I think that's true across everybody at Grindr. So I'm really excited about the world that's coming because this is all super early days. This is like 1996 for the internet.
In terms of the products we're building, we have created some really cool, previously unimaginable experiences, all of which are now in EDGE for our users. But the way we think of them is a little bit like a Tesla Roadster. EDGE is like the Grindr version of the Roadster. It's designed for a few people who are going to go and test drive it first. But over time, we will take these product features and democratize them by making them available to a broader set of users over time. AKA, create our version of a Model X and then a Model Y. Because we want every Grindr user to have a really awesome AI-native experience. My guess is that Grindr that will exist in two years as a product will be fundamentally different than the Grindr that exists today.
It will be way more AI-native, and AI will be embedded into every single use case of what's happening in the product.
Okay, understood. You've been on quite a journey with respect to your cost structure and investments because when you took the job and some of the earlier conversations we had, were you found you could be more efficient as a company coming out of COVID than maybe you had thought when you'd first taken the job.
Yep.
There are a lot of things you want to invest in to make sure you don't miss the market opportunity. Talk a little bit about the investment and capital allocation journey you've been on as a CEO in finding the right balance between driving efficiencies, but also not missing growth opportunities.
Yeah. When I took this job, if I had to go back to 2022 and say, How big of an engineering team would you need today in 2026 to be doing all the things that you are doing? I would've said something like 300 or 350 people. I remember meeting with the former CEO of PayPal, who is now the CEO of Verizon, roughly in that time period, I think it was early 2023, and telling him this, and he's like, No, George, you won't. I'm like, What do you mean I won't? 300 people is not actually that many engineers. He's like, I'm telling you won't. That was the first time I started to really think through what will AI do to engineering, and he really challenged me on that point. Frankly, he was right and I was right.
We are doing what it would have taken 300 - 350 people to do from technology investment perspective in 2022. But we're doing it with about 100 people, about 95 to be exact. We're not even done with all the efficiencies. That's one bucket of what I learned. Number two, we learned that productivity at Grindr in 2022 overall, across the entire business, was nowhere near at the level that it needed to. I think Grindr had hired a ton of people during COVID. All of them had been remote. It was really suffering from that remote environment because there was no unifying culture that was bringing people together and pushing us to go after audacious goals. The amount of hours people were working was nowhere near where it needed to be.
We decided to come back to the office two days a week. That forced a lot of people to make a choice, and many of them chose to leave. The result was, today, Grindr has about 185, 186 people. That's less people than where we peaked at in 2023 at 2022. Yet, in terms of revenue, we are nearly 3x more. Per employee revenue has gone up dramatically. What happened this year is we thought we'd end the year at like 220, 230. We're not anywhere near that, so clearly we're not going to end the year at 220, 230. The reason is that we are hiring at a much slower pace. Our bar has gone up, but because of AI, we don't need as many people. We are much more thoughtful about who we hire.
We've not fired people because of AI, but we certainly have slowed down our hiring because of AI. I don't think we're not investing in anything we need to be doing. Our investments are fairly strong. I don't feel constrained in going after new goals and audacious things. But I think that being lean is a virtue.
Yeah.
Quite frankly, I probably would have been more cautious about this in 2023 had Elon not taken over Twitter and turned a 6,000 organization to a 50-person organization. Nothing had happened. I'm like, If he can do it, I can too. The result has been pretty positive, I think.
Yeah. Understood. We only have a few minutes left, but I always like to leave on some big picture dynamics of what you're most excited about over the next 12- 18 months, or frame it as what will we be talking about in 12 months' time. Lay out the path forward for us over the next 12 + months and what you're most excited about.
Number one, I'm super excited about our premiumization efforts and launching EDGE and what that will mean for the product, as well as how AI will start being used by every other Grindr user. I think we'll have a lot more proof points of that in product, and I'm psyched about that. Number two, I'm really excited about healthcare and what opportunities lie there. Number three, I don't know what the answer here is going to be, but when I sit with our head of engineering and talk to him about what he is conceiving to do, it feels like you're talking about science fiction.
We had an engineer, one of our lead engineers, actually, posted a note on Slack. I am going to say two things. He posted a note on Slack a few weeks ago saying, I was walking my dog and I got a notice in my email of a bug that I had a data file. It was a Saturday. I went to Devin, which is one of the coding tools built by Cognition, and told Devin, Can you look at this bug, replicate it, write code to fix it if it is actually real, and then let me know that you have done that? He is like, Before I got home, Devin had done all those things and sent me the full code that it had written to fix the bug, saying it was ready to be checked in.
I had to look at the code, review it, and press one button and check it into production. When you hear things like that, it is literally like watching Star Trek in 2000, and I don't know, one or something, and thinking of, Oh, yeah, computer, blah, blah, and then the computer would do that, but that is actually real life now.
Yeah.
Now we can't do that for totally new features yet, like you do that for fixing a bug, but probably in a year, we will be talking about that about new features. Not only engineers will be doing that, but product managers who had never written a line of code before will be engaging with a software tool that will be helping them be engineers. So that is incredibly exciting to me, and I think the opportunity there is really massive. The second thing I am really excited about is self-improving product development.
Where today we design tests, a product manager and data scientist will sit together, design a test, and say, Okay, I am going to launch an A/B test, product with these features, product with these features, and I am going to see which one does better. But, a world that we will be seeing soon will be where you won't have to design a test. The product itself will be agentic enough where it will conceive of what it needs to be testing and then will self-improve and come back to and tell you, Hey, I experiment with this, with this, and with this, and I think this is the answer and this is what we should be doing. That, to me, is even more magical than the first thing, but it is coming, and I really can't wait for that.
Because as somebody who's a founder who has 50 things I want to build and I can't do all of them, if the software itself can help me be building all those things, that's pretty amazing.
Well, there's a lot to talk about in 12 months' time, plus or minus, as we look forward. George, look, I always appreciate the opportunity to have a conversation. Please join me in thanking Grindr for being part of the conference this year.
Thank you.